The Financial Stability Oversight Council has released a set of recommendations that would impose structural reforms intended to mitigate the risks posed by money market mutual funds to the financial system. According to the FSOC, the proposals would reduce the risk of runs and significant problems spreading through the financial system. The council noted that a proposal is necessary in the absence of Securities and Exchange Commission action. The three proposals would require money market funds to have:

a floating net asset value per share by removing the special exemption that currently allows them to utilize amortized cost accounting and/or penny rounding;

a net asset value buffer with a tailored amount of assets of up to 1 percent to absorb day-to-day fluctuations in the value of the funds' portfolio securities; and

a risk-based buffer of 3 percent to provide explicit loss-absorption capacity that could be combined with other measures to enhance the effectiveness of the buffer and potentially increase the resiliency.

Sen. Pat Toomey, R-Pa., criticized the proposals and urged the FSOC to “follow the SEC's bipartisan lead in eschewing these proposed regulations.” He asserted that the “SEC has overseen the regulation of money market funds for four decades, and it understands the product best.”

FSOC Chairman Treasury Secretary Tim Geithner stressed that the “hope is that a public debate will provide a concrete basis for the SEC to move forward.”

In August 2012, SEC Chairman Mary Schapiro announced that the SEC did not have the basis to proceed with a vote to elicit public comment on an additional set of reforms, which prompted the FSOC to consider the matter. Schapiro noted that “the SEC is best positioned to implement reforms to address the risks that money market mutual funds present.” She added that if the SEC does in fact move forward with “meaningful, structural reform” then the FSOC would not issue a final recommendation.